A NEW enterprise agency aimed at energising the economy of the south of Scotland will be operational by 2020.

The Scottish Government has revealed that the agency will be a public sector body, operating on the same principals as Highland and Islands Enterprise (HIE).

Along with Scottish Enterprise, it will become the third such agency in the country.

The South of Scotland Enterprise Agency will cover the Dumfries & Galloway and Scottish Borders local authority areas and will operate autonomously with its own staff and budget. This will enabled the agency to invest in infrastructure, support local businesses, and deliver support for communities.

The agency’s primary objective, according to Economy Secretary Keith Brown, will be “to meet the distinctive economic needs of the south of Scotland”.

“We have recognised the importance of providing dedicated support to the South of Scotland in the same way we currently do for the Highlands and Islands,” said Mr Brown.

Its establishment was recommended in the final report from the Enterprise and Skills Review, published yesterday. Primary legislation will be put before the Scottish Parliament in 2018 to bring the agency into effect.

In the report, the Scottish Government noted: “The new organisation will bring a fresh approach, with a clear and unambiguous focus on place, enabling a response informed by the economic context and sensitive to the needs and opportunities of the area.”

Scottish Chambers of Commerce welcomed the plans but called for close scrutiny of the new agency structure’s achievements over the coming years to ensure quick and effective progress.

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “We welcome the creation of a South of Scotland Enterprise Agency, focused on the particular opportunities, challenges and needs of businesses in Dumfries & Galloway and in the Scottish Borders.”

Factors impinging the area’s economic growth, said the report, include the area’s ageing population and a lack of opportunities for young people; poor connectivity between towns, and fragile local economies.

Further economic challenges in the area are a dominance of sectors with low wages, low start-up rates and less investment in innovation and research.

The establishment of such an agency was proposed in a report by HIE chairman Lorne Crerar, published in February. Phase 2 of the Enterprise and Skills Review represents the Government’s response to Mr Crerar’s findings.

In addition to the new agency serving the south of Scotland, the Scottish Government has outlined plans to strengthen engagement with regional partnerships across the country, including working closer with the private sector; and boosting trade and investment through improved co-ordination in international activity.

A strategic board will be set up in autumn to provide guidance on the overall direction of the enterprise and skills agencies, while a cross-agency analytical unit will be established to drive and analyse performance and business support decisions.

An implementation board, chaired by Mr Crerar, will be established immediately to take forward the proposals outlined in the report.

Unveiling the report on a visit to green energy company Kite Power Systems (KPS), which itself revealed a £2 million funding boost from the Scottish Investment Bank, Mr Brown said: “This report shows how we can transform the performance of our economy and enable more businesses to deliver strong, vibrant and inclusive growth at scale.”

KPS recently relocated its head office to Glasgow from the south of England. A new prototype is being manufactured and assembled at Kellwood Engineering in Dumfries. Earlier this year KPS outlined plans for a test facility near Stranraer after receiving £5m in funding.